August 2017
If an administrative agency still executes a contract with a supplier in a tender procedure which the administrative agency is clearly aware to be defective before the bid opening, the issue of inadequate protection of reliance interest as a result of the supplier's violation of its obligations in the beginning does not exist(Taiwan)
Teresa Huang
The Supreme Court rendered the 105-Tai-Shang-30 Civil Decision of January 7, 2016 (hereinafter, the "Decision"), holding that if an administrative agency still executes a contract with a supplier in a tender procedure which the administrative agency is clearly aware to be defective due to inconsistence with the procedure stipulated in the tender instructions, the issue of inadequate protection of reliance interest as a result of the supplier's violation of its obligations in the beginning does not exist.
According to the facts underlying this Decision, the Appellant in this matter asserted as follows. The Appellee entered into the procurement agreement at issue with the Appellant, completed the preliminary, midterm and final reports pursuant to the agreement and requested the Appellant to complete the examination. However, the Appellant only made the first installment payment. After the Appellee informed the Appellant of construction completion, the Appellant failed and refused to conduct acceptance inspection and did not pay the second and third installments. Therefore, the complaint was filed to seek payment. The first and second instance trial courts both ruled in favor of the Appellee. Dissatisfied with the second instance decision, the Appellant appealed.
According to the Decision, although the tender procedure for the agreement at issue was defective because qualification examination was conducted, business plan was evaluated and price negotiation was engaged without following the procedure stipulated in the tender instructions with one-time bid submission and phased bid opening, still the Appellant executed the agreement with the Appellee even though the Appellant had been aware of the defect before bid opening in the tender procedure at issue. The Public Construction Commission subsequently issued an examination decision to both parties. Not rescinding the agreement at issue, the Appellant even notified the Appellee that the procurement procedure would not be suspended. Later, the Appellant made the first installment payment and completed the examination of midterm and final reports. According to the above-mentioned circumstance, the situation that the contract should not have been awarded to the supplier and the issue of inadequate protection of reliance interest due to the Appellee's breach of obligation in the beginning as alleged by the Appellant did not exist.
The Decision also indicated that when a party uses the timing of an uncertain fact as the deadline for fulfilling an obligation, if the obligor prevents the occurrence of such fact by unjustified means, Article 101, Paragraph 1 of the Civil Code shall apply by analogy, and the repayment deadline shall be deemed to have expired (compare the 87-Tai-Shang-1205 Decision of the Supreme Court). According to the facts underlying the Decision, the parties agreed that the 40% final payment would be paid after the Appellant completed the acceptance inspection. The occurrence of an uncertain fact which is the completion of the acceptance inspection was the deadline for the final payment. Since the Appellant's failure to conduct the acceptance inspection prevents the completion of the acceptance inspection by unjustified means, the repayment deadline should be deemed to have expired. Although the reasons of the original decision against the Appellant were different, since the outcome of the decision was the same, the decision was upheld and the Appellant's appeal was rejected.
The Supreme Court rendered the 105-Tai-Shang-30 Civil Decision of January 7, 2016 (hereinafter, the "Decision"), holding that if an administrative agency still executes a contract with a supplier in a tender procedure which the administrative agency is clearly aware to be defective due to inconsistence with the procedure stipulated in the tender instructions, the issue of inadequate protection of reliance interest as a result of the supplier's violation of its obligations in the beginning does not exist.
According to the facts underlying this Decision, the Appellant in this matter asserted as follows. The Appellee entered into the procurement agreement at issue with the Appellant, completed the preliminary, midterm and final reports pursuant to the agreement and requested the Appellant to complete the examination. However, the Appellant only made the first installment payment. After the Appellee informed the Appellant of construction completion, the Appellant failed and refused to conduct acceptance inspection and did not pay the second and third installments. Therefore, the complaint was filed to seek payment. The first and second instance trial courts both ruled in favor of the Appellee. Dissatisfied with the second instance decision, the Appellant appealed.
According to the Decision, although the tender procedure for the agreement at issue was defective because qualification examination was conducted, business plan was evaluated and price negotiation was engaged without following the procedure stipulated in the tender instructions with one-time bid submission and phased bid opening, still the Appellant executed the agreement with the Appellee even though the Appellant had been aware of the defect before bid opening in the tender procedure at issue. The Public Construction Commission subsequently issued an examination decision to both parties. Not rescinding the agreement at issue, the Appellant even notified the Appellee that the procurement procedure would not be suspended. Later, the Appellant made the first installment payment and completed the examination of midterm and final reports. According to the above-mentioned circumstance, the situation that the contract should not have been awarded to the supplier and the issue of inadequate protection of reliance interest due to the Appellee's breach of obligation in the beginning as alleged by the Appellant did not exist.
The Decision also indicated that when a party uses the timing of an uncertain fact as the deadline for fulfilling an obligation, if the obligor prevents the occurrence of such fact by unjustified means, Article 101, Paragraph 1 of the Civil Code shall apply by analogy, and the repayment deadline shall be deemed to have expired (compare the 87-Tai-Shang-1205 Decision of the Supreme Court). According to the facts underlying the Decision, the parties agreed that the 40% final payment would be paid after the Appellant completed the acceptance inspection. The occurrence of an uncertain fact which is the completion of the acceptance inspection was the deadline for the final payment. Since the Appellant's failure to conduct the acceptance inspection prevents the completion of the acceptance inspection by unjustified means, the repayment deadline should be deemed to have expired. Although the reasons of the original decision against the Appellant were different, since the outcome of the decision was the same, the decision was upheld and the Appellant's appeal was rejected.
